Oman said to follow Abu Dhabi with SWF merger plan

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Oman, the largest Arab oil producer outside the Organization of Petroleum Exporting Countries, is considering a merger of its two main sovereign wealth funds amid a slump in oil prices, people familiar with the matter said.

The Gulf state is seeking to combine State General Reserve Fund with smaller peer Oman Investment Fund to create an entity with about $25 billion in assets, the people said, asking not to be identified as the information is private. The discussions are preliminary and no financial advisers are currently involved, the people said. Final agreements haven’t been reached and talks may still falter, they said.

Oman is studying ways to improve its investment management and a merger of the two funds could include other investments, one of the people said. Countries in the Gulf Cooperation Council, a group of six oil-producing Arab monarchies, are restructuring national oil companies - selling shares, merging units and cutting costs - after crude slumped by more than half since 2014.

Representatives for SGRF and OIF didn’t immediately respond to requests for comment. No one at Oman’s finance ministry was available for comment.

Abu Dhabi is merging its sovereign wealth funds Mubadala Development Co. with International Petroleum Investment Co. to cut costs and combine complimentary businesses.

SGRF was set up in 1980 to invest the country’s financial surpluses and mostly focuses on opportunities outside Oman, according to information on its website. It manages assets of about $18 billion, according to the Sovereign Wealth Fund Institute. The annual return reached 7.1 percent since its inception, according to the fund’s 2015 report.

Oman Investment Fund was founded in 2006 and is fully funded by the Ministry of Finance, according to its website. The SWFI estimates the fund’s size to be about $6 billion in assets.

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